The Optimism Quotient, which determines how confident industry executives are for the coming year, was measured at 102, indicating strong optimism for 2000 where construction activity will increase, but at a slower rate.

In the forecast, 49 percent of all builders believe residential building will present the greatest opportunity for their businesses in 2000. The average annual sales volume for contractors is expected to be $850,000, which goes along with the steady growth of $110,000 for two years in a row.

Contractors surveyed cite the most serious problem facing the construction industry as the lack of skilled, quality labor, with 38 percent calling it their No.1 obstacle. Also, 70 percent of all contractors anticipate increasing their spending on financing, service, parts and maintenance.

Half of those surveyed plan to buy construction equipment in 2000, which is up from 33 percent a year ago. The average dollar amount of new equipment is expected to be $81,459, more than $40,000 lower than last year's record amount of $132,125.